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4 April 2007

Terrific Trends To Tap(HKTDC Enterprise, Vol 04,2007)

Electronic toys will continue to power strong sales round the world during the coming year, but there will still be a steady demand for traditional toys.

So said key buyers at the recent Hong Kong Toys and Games Fair, who noted that the electronic toys trend shows no sign of slowing as more and more products hit the market for all age groups.

"There are a lot of items for kids aged 9, 10 and up these days - a lot of music-related items that look like iPods and cellphones," noted Bob Braid, senior category manager for toys, stationery and seasonal items at 180-plus Canadian chain Giant Tiger. "Kids want to buy the latest electronic fad or gadget to emulate their parents or older siblings."

His view was echoed by Michel-Ange Slougki of Chile's Miketoys Internacional. "Clearly electronics are more in demand these days," he said. "The trend is going towards electronic games, such as Game Boy consoles and other plug-and-play items."

However, action figures are also extremely popular in Latin American markets. "Electronic toys are growing a lot in our markets, while sales of traditional items such as Barbie and Bratz dolls are always growing," explained Compania Panamericana de Licencias chairman Luis Salazar, who noted that action figures are a "number-one" product in Latin America. "All kinds are popular, such as Spiderman, Superman and Batman."

Hungarian markets, meanwhile, hunger for "creative products" according to Tamas Schekk, sales manager of Bonsai Budapest International, an importer and distributor of toys, games, outdoor and sports items that mainly supplies hypermarkets in Hungary and Romania. "We like products which allow children to use and develop their skills, like glass painting toys or other educational toys," he said.

Although Eastern European markets can be quite price-sensitive, consumers still look for quality. "We like to buy not only for the mass market, but we would like to go upwards and move away from the 'very cheap' category of products," Schekk explained.

Scandinavian countries also place a premium on quality, said Mikael Haneskar, managing director of Swedish toys and puzzles importer and distributor Tilda's AB, who believed the pendulum might be swinging back towards traditional toys.

"When we started in the early 1990s it was wooden toys," he recalled, adding that Scandinavian countries are concerned about the environment and want educational toys.

"I have a feeling that it's going back to the basics again - when people want to spend more time with their kids with meaningful toys rather than those which keep kids entertained for hours on their own."

Haneskar noted that fads come and go and items are "very hot", but usually only for a short period. "For the rest of the year, you have to rely on your basic products," he insisted. "The products we stock - such as puzzles, marbles, figurines and DIY items - we sell 12 months a year."

Stephen Johnco, managing director of Australian company Johnco Productions, endorsed that strategy. "We tend not to go for the latest trend or fad," said Johnco, who has been distributing educational toys in Australia for 27 years. "We sell products which will be just as popular in 20 years' time."

Most buyers were generally positive about the future, with several predicting that fewer items would be sold each year but they would be of higher value. "That has been the trend for years, so it will continue," Braid believed.

However, Latin America is one market that is clearly expanding. "The GDP is growing - and the toy category is growing too," Salazar explained. "The toy industry went down in the past few years - but it is starting to grow again."

Other emerging markets such as India also expect steadily increasing growth, with, for example, the Reliance Group planning a mega nationwide expansion this year that will include 60-70 hypermarkets and up to 800 convenience stores.

"Our first hypermarket will open in Ahmedabad this year, and after that there is no looking back," said Devanand Shenoy, deputy general manager of Reliance Industries' retail business section.

"There is plenty of potential for growth in the Indian market, particularly for electronic and battery-operated toys."

There is clearly plenty of optimism among the world's toy buyers, who are equally certain that they will always find exactly what they want at the Hong Kong Toys and Games Fair.

LOOKING GOOD

The global toy industry is expected to shine this year, according to a Hong Kong Trade Development Council (TDC) survey at the Hong Kong Toys and Games Fair 2007.

The overall toy market will grow by 10% with retail markets in the Chinese mainland and Eastern Europe climbing 18%, more than 400 buyers and 700 exhibitors predicted.

This optimism was clearly founded on impressive results over the past year, when orders soared 18%, quantities jumped 15% and unit prices rose 14%.

Survey respondents predicted that this year's fastest-growing sector would be children 6-10 years of age, while educational, computer and battery-operated and electronic toys and games would top the list of product trends.

Respondents believed that price, educational value, brand and safety would be the major selection criteria, with educational toy sales expected to increase by 12% this year.

Toys responding to creativity, logic, IQ and language, and ranging in retail price from US$11-20 were expected to be among the most popular in the educational sector.

It should also be a good year for adult toys as well, with portable video games such as PlayStation portables and Nintendo's Double Screen, TV/computer/Internet games, remote-control helicopters and other electronic toys and artificial intelligence/robotic pets ranking high on buyer lists.

RACING AHEAD

First-time Hong Kong Toys and Games Fair visitor Petr Divis was "highly impressed" by so many ultra-modern toys, but preferred more down-to-earth playthings.

His fortm as sales manager of Prague-based Dino Toys is selling board games through 250 supermarkets and a chain of 150 toy shops, as well as toy chains in other Eastern Europe countries, Israel, the Middle East and South Africa.

"Electronic and radio-controlled toys are popular with children, but Czech adults still prefer a variety of board games, jigsaw puzzles and similar pastimes," he observed.

"We specialise in board games, and though the Czech Republic only has a population of 10 million, we have had fantastic success with Horse Race and Bets, selling more than two million of them in the past 10 years."

The dice game, created by the owner of Dino Toys, sees 4-5 players controlling 20-25 "horses" in each race, with each player controlling a stable of four or five animals.

"We have long, cold winters when families and friends gather around the fire to play board games, and this game was an immediate success," Divis explained. "Our game is far more popular than real horse races in the Czech Republic."

Divis explained that his company's adult jigsaw puzzles are specially designed to combine educational and artistic values, and include scenes of overseas cities, their attractions and natural landscapes. "Czechs find it enjoyable to piece together such puzzles while sitting beside a roaring log fire," he maintained.

He came to the Hong Kong fair to inspect the latest products and to seek out China contacts. "If possible we would like a partner on the mainland who could facilitate our business while acting as our eyes and ears," he said.

Divis has previously visited the Nuremberg Toy Fair in Germany but believes the Hong Kong Toys and Games Fair is "very different with lots of new ideas, and a very international product profile".

STILL THE BEST

One of South America's leading toy importers is prepared to go to bat for the privilege of sourcing in Hong Kong, but admitted he faced a big stumbling block.

"The government gives priority to domestic products to protect the economy, and permission is needed to import any items from overseas," Argentine Association of Toymakers and Associated Products president Dario Mermelstein explained. "Toys are in the non-essential category - and a large percentage of our toys, and parts to be assembled in Argentina, are imported from the mainland or Hong Kong."

The Argentine toy industry therefore banded together to form the Toymakers' Association and has swayed the government into a "cautiously sympathetic" attitude over import permits.

Mermelstein expected the situation to gradually become better, so that open trading rights will eventually be restored, and was anticipating the day he will welcome a Hong Kong-China toy-trade delegation to Argentina. "The number-one toy-making country in the world is China, and the stepping stone to its factories is Hong Kong - that's why we are enthusiastic about a visit."

Mermelstein is also president of Hipermercado del Juguete, which has eight stores in Buenos Aires and supplies many smaller toyshops nationwide. "The trend is towards electronic and battery-operated toys, baby products using electronics that produce light and sound, and for older kids interactive playthings up to computers," Mermlestein explained.

Mermelstein noticed many improvements at this year's fair. "There was a far greater variety of toys, many of them electronic, and a much wider selection," he recalled. "The new products were particularly impressive, and illustrated just how far toymakers in Hong Kong and the mainland have advanced in design and ingenuity over the past decade."

He believed that Hong Kong was better than the New York Toy Fair, not only in the wide variety of toys it displayed but also in quality and price. "I will definitely be back next year," Mermelstein added.

CUTTING COSTS OF GOING GREEN

Most manufacturers believe that complying with environmental measures will enhance their competitiveness, despite production cost increases of about 14%.

A survey at the Hong Kong Toys and Games Fair 2007 found that manufacturers hoped to offset the increased production expenses by modifying product designs and sharing costs with buyers.

About 90% of buyers said they were willing to pay an average premium of 8.7% for products that met the new regulations and practices.

Nearly 80% of the exhibitors interviewed had already taken measures such as introducing environmentally-friendly packaging and adopting "green" product designs to comply with global environmental initiatives.

These include Waste Electrical and Electronic Equipment (WEEE) regulations, Restriction of Hazardous Substances (RoHS), EN71-Part 9, a European toy safety standard that addresses the hazards of certain organic chemical compounds found in toys, and the ICTI Care Process.

The latter, established by the International Council of Toy Industries (ICTI), is a manufacturing programme aimed at ensuring fair labour treatment and safe working conditions in the toy industry.

FAIR FACTS

The Hong Kong Toys and Games Fair 2007 from January 8-11 confirmed its hard-earned reputation as the biggest of its kind in Asia and the second-largest in the world.

The four-day fair organised by the Hong Kong Trade Development Council attracted:

1,978 exhibitors from 37 countries and regions

29,324 traders from 115 countries and regions, including major buying groups from the Chinese mainland, the US, Japan, Taiwan, Korea, Australia, the UK, Thailand, Germany and the Philippines

Running concurrently with the Hong Kong Toys and Games Fair, the seventh Hong Kong International Stationery Fair drew more than 260 exhibitors from 15 countries and regions, including three newcomers - India, Japan and the UK.

The stationery fair's two new attractions, the Paper and Printing Products Zone and the Office Supplies Zone, proved a big hit with exhibitors and buyers alike.

The 2008 edition of the International Stationery Fair will be held concurrently with the Hong Kong Toys and Games Fair from January 7-10 at the Hong Kong Convention and Exhibition Centre.

As usual, the Hong Kong Toys and Games Fair will feature a mind-boggling range of items for children of all ages that will undoubtedly attract buyers from all markets.

Everything from traditional toys, story books, outdoor and sporting items, hobby goods, baby toys and products to magic items, candy and paper toys will be available. Seminars, networking events and onsite surveys will also allow industry players to exchange views and intelligence.

TEXT BY GEOFFREY SOMERS

PERFECT PRODUCTS FOR BUSY BUYERS

Whatever buyers wanted, they were bound to find it at the Hong Kong Toys and Games Fair 2007, which spotlighted a staggering selection of tip-top toys from all around the world.

For example, New Jersey-based Alex produces more than 650 items, including bathtub, fashion, jewellery, beach and pool toys and children's furniture.

"We want to build kids' self-esteem and the 'feel-good factor' that comes with having created something," explained Alex president and founder Rick Amdur.

Hot this year is a range of big, chunky products called Little Hands, specifically designed for the physical, cognitive and practical needs of toddlers and preschoolers.

"The Little Hands range focuses on stimulating learning through four key skill sets: touching, seeing, counting and spelling," said Amdur. "We aim to help children prepare for school and increase communication skills."

Other hot products include more than 100 Rub a Dub bath time items that include award-winning Tub Tunes - a range of high-quality instruments such as Water Flute, Water Xylophone and Water Drum for use in the bathtub.

Similarly, Fashion in the Tub, which features two foam friends and 32 different outfits, won the Child Magazine Toy of the Year award in 2006.

"Hong Kong is a top location for us because we have access to a wide selection of buyers from this region, particularly Asia, and we find that doing business here is easy," Amdur added.

"We've been coming to the Hong Kong Toys and Games Fair for four years and wouldn't miss it, along with the other top fairs in Nuremberg and New York."

"These toys are designed to keep kids physically active," explained director David Szumer. "They help develop motor skills and coordination, as well as increase physical fitness."

Yoho!'s toys include the Diabolo, an hourglass-shaped, spinning yoyo that can be spun, bounced and tossed in the air, and the Lightwave twirling staff, which includes a specially-designed IC chip that allows the display to stop on a particular colour. All Yoho! products come fully equipped with an instructional CD for beginners and experienced players alike.

Szumer said business had been "promising" and many international buyers were interested, including Korea and the Chinese mainland. "Hong Kong is an exciting business environment because it is an international city, but it also has access to new markets in the region," Szumer noted. "I'll definitely return next year."

Equally popular were the radio-controlled scale model sports and Formula One cars made by Meijaxin Toys Co Ltd for petrol heads of all ages.

"One of the most popular toys, especially in Europe, was the Ferrari 248 F1 or the Renault R 26 Formula One cars," said Li. "Our customers are both adults and children as remote-control cars are a hobby as well as a toy."

Based in Hong Kong with production facilities in Guangdong Province on the Chinese mainland, Meijaxin exports to the US and Europe.

"Hong Kong is a good base because we can easily source from China and around the region," Li maintained. "I think this fair is one of the best in the world, because it is well-organised and in a convenient location for visitors."

Football fans weren't forgotten thanks to Tipp-Kick, a German table football game for the whole family featuring two metal players who shoot the ball along the ground or lob it in the air, while the goalkeeper dives and leaps to clear the ball.

The game is played with a two-tone, dice-like ball, explained director Mathias Mieg, whose grandfather invented the game in 1924.

"This game combines ability, skill and tactics," he insisted. "Soccer is never going to go out of fashion, so our company continues to modernise and develop new products along with the sport."

Tipp-Kick expanded its range in 2006 for the World Cup, with World Cup Classics that featured special collectors' item editions of legendary champion teams, including Germany (1954), England (1966), Brazil (1970) and Italy (1982).

"There is even a professional league of Tipp-Kick players in Germany, Austria and Switzerland, and it is just starting to take off in Australia," explained Mieg.

"Companies can use Tipp-Kick as a marketing tool by advertising on the boarding at the side of the pitch or on the player, and it also makes an excellent corporate gift."

Oversized Tipp-Kick figures have become objects of art, with Swiss artist Beat K¢nzler creating four-metre high Tipp-Kick players for a Swiss football gala.

Tipp-Kick is a regular feature at the Hong Kong Toys and Games Fair. "We would never miss this event," Mieg insisted. "Hong Kong is an international city, where it is easy to source products and connect with buyers."

Parents keen on encouraging more cerebral pastimes have made Eastcolight (HK) Ltd's Science Time educational toys must-have items for young science enthusiasts.

The Science Time range allows kids to experience such esoteric delights as building robotic fish and birds, experimenting with microscopes, kaleidoscopes and telescopes, assembling electric fans to learn how electricity is generated, and understanding the basics of physics by building an air-jet rocket.

"We want to make science - chemistry, physics and biology - exciting for children", explained general manager Sally Sze, adding that Eastcolight's newest products include a Digital Weather Station kit and an easy-to-operate, clean Eco-Aquarium with real fish that teaches young children how to look after pets. "We distribute 150 educational toys to more than 90 countries around the world."

Other products include a girls' line of cute pink microscopes with matching pink protective goggles, and a new electronic Master-of-Spy that features a compass, sound recorder, listening devices and cameras.

A pre-school range to be developed this year will continue the Science Time commitment to provide easy-to-follow instructions and child-safe, age-appropriate materials.

Buyers are also flocking to purchase the MicroKite from UK-based Li-Lo Leisure Products Ltd, which was exhibiting at the Hong Kong Toys and Games Fair for the second year running.

"The MicroKite has been very popular this year," admitted account manager Matthew Collison, noting that it provides all the fun of flying a kite without the hassle. "The MicroKite is made of special lightweight material, has a remote control and is so easy to handle it is suitable for youngsters eight years and older."

Other hot products from Li-Lo Leisure Products include various musical items such as a drum kit and electric guitar complete with amplifier and case.

"We stock a vast range of products in our purpose-built warehouses in Hong Kong and China, and can keep track of latest industry trends in this region," Collison said. "Business at last year's fair was very successful, so of course we had to come back this year as the Hong Kong Toys and Games Fair is one of the highlights of the international fair calendar."

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